A worker walks near a well pad at Christina Lake, a situ oil production facility half owned by Cenovus Energy Inc. and ConocoPhillips, in Conklin, Alta., in 2013.Brent Lewin/Bloomberg
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
The benefits to Canadian integrated energy companies from a low loonie will not be enough to compensate for the weakness in oil prices, Citi Research said.
"Despite the bearish crude oil view held by our commodities team over the last several months, we still held a positive stance on the Canadian integrated oil companies because we thought declining differentials on Canadian heavy oil and a weakening Canadian dollar would counter the blow of lower crude prices," the analysts said.
"However, the sharp decline in prices has forced us to revisit our thesis."
The global energy selloff has prompted Canadian integrated oil and gas companies to cut their 2015 spending by about 30 per cent over last year.
"2015 is likely to be a tough year for oil companies. The Canadian majors have maintained conservative balance sheets and we believe this will serve them well during the price weakness in 2015," the report said.
Citi downgraded the several Canadian energy stocks to "neutral" from "buy" and lowered its target prices as follows:
Cenovus Energy Inc. to $26 (Canadian) from $37. The average analyst price target over the next year is $27.77.
Husky Energy Inc. to $29 from $37. The average price target is $29.43.
Imperial Oil Ltd. to $50 from $60. The average price target is $51.73.
Suncor Energy Inc. to $38 from $48. The average price target is $42.34.
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CGI Group Inc.'s revenue has levelled off recently, making the stock fairly valued until signs of growth re-emerge, Desjardins Capital Markets analyst Maher Yaghi said.
"While our view of the company's ability to deliver long-term bottom-line growth to shareholders through margin improvement and accretive acquisitions has not changed, we believe it will require a few quarters before it can re-establish a revenue growth trajectory," Mr. Yaghi said.
CGI's stock has benefitted of late from a flight to safety amid the commodity pullback, and the stock's valuation discount has narrowed against its faster-growing U.S. peers.
"Our view is that excluding M&A, the stock is fairly valued at current levels versus comparable companies," the analyst said.
He raised his target price on the stock to $50.50 (Canadian) from $46, and maintained a "hold" rating. The average analyst price target over the next year is $47.29.
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Foreign exchange headwinds stemming from the strong U.S. dollar make for yet another challenge for Herbalife Ltd., says Canaccord Genuity.
Analyst Scott Van Winkle concludes that weaker emerging market currencies will shave 5 per cent off the nutrition and weight management company's revenues and 9 per cent off its earnings per share in 2015 relative to his previous estimates.
The company is currently under investigation by the U.S. Federal Trade Commission and has been accused of being a Ponzi scheme by activist investor Bill Ackman of Pershing Square, who has a massive short position in the stock.
"We continue to believe that the shares are significantly undervalued assuming any reasonable resolution to regulatory scrutiny," said Mr. Van Winkle, who believes the FTC will not deal a "death blow" to the company.
He maintained his "buy" rating on the stock but lowered his price target to $50 (U.S.) from $60. The average analyst price target is $57.80
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The strong performance of General Electric Co.'s industrial segment has been masked by the shrinkage of GE Capital, says UBS.
This combination makes the company look like an "unwieldy giant that cannot grow" and weighs on its valuation, according to analyst Shannon O'Callaghan.
"We think there is a significant fundamental turn taking place at GE where a period of significant growth investments is reaching maturity and the organization is undergoing a renewed focus on improving its cost position at all levels of the organization," he said.
Mr. O'Callaghan believes emphasis on cost controls will help GE Industrial expand margins in its equipment business.
The analyst initiated coverage on the stock with a "buy" rating and price target of $30 (U.S.).
The average analyst price target is $29.
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Alamos Gold Inc.'s miss on production in 2014 doesn't bother Desjardins Securities nearly as much as its poor guidance for the year ahead.
"Overall, we are not terribly concerned with the 4Q result, given that most of the ounces expected in 4Q should flow out in 1Q15," said analyst Michael Parkin. "The high-grade mill issues appear to be relatively short-term in nature, with management having a plan in place to address the throughput and recovery challenges."
The gold miner's projected total cash costs came in 20 per cent above the consensus estimate, which the analyst called "a far weaker outlook" than he anticipated.
Mr. Parkin downgraded the stock to "hold" from "buy" and placed his price target, which was previously $10.75 (Canadian), under review.
The average analyst price target is $11.94.
In other analyst moves:
B2Gold Corp. was raised to "buy" from "hold" at Clarus Securities. The 12-month target price is $3.25 (Canadian) per share.
Gildan Activewear Inc. was downgraded to "buy" from "strong buy" at Industrial Alliance. The target price is $80 (Canadian) per share.
Check Point Software Technologies Ltd. was downgraded to "neutral" from "overweight" at JPMorgan. The target price is $83 (U.S.) per share.
Dunkin' Brands Group Inc. was downgraded to "market perform" from "outperform" at Wells Fargo.
Emerson Electric Co. was downgraded to "neutral" from "outperform" at Robert Baird. The target price is $65 (U.S.) per share.
Flowserve Corp. was downgraded to "neutral" from "outperform" at Robert Baird. The target price is $60 (U.S.) per share.
With files from Bloomberg